ADB's SASEC POWER SYSTEM EXPANSION: A Game Changer

The industrial sector in western Nepal has undergone significant transformation with the opening of the Kushma-New Butwal 220 kV Transmission Line project and the completion of the Kaligandaki Corridor (Dana-Kusma-New Butwal 220 kV Transmission Line project). The Rupandehi, Kapilvastu, and Nawalparasi districts can now rely on a dependable, high-quality, and ecologically friendly energy system. The transmission and distribution systems recently completed as part of the South Asia Subregional Economic Cooperation Power System Expansion Project (SASEC) by the Asian Development Bank (ADB) have significantly increased the capacity of the region's power infrastructure in evacuating the electricity generated in Kaligandaki and other river basin and providing relief to industrialists.

Dec. 14, 2023, 8:58 a.m. Published in Magazine Issue: VOL. 17, No. 09, December.15,2023 (Mangishr,29. 2080) Publisher and Editor: Keshab Prasad Poudel Online Register Number: DOI 584/074-75

The ADB-financed 220 kV Kali Gandaki Corridor Transmission Line Project is an important effort given Nepal's energy policy, which seeks to achieve zero emissions and rapid economic growth by 2045.

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The project is benefiting both the environment and the people of western Nepal. Its significance is recognized by the region's business community, industrialists, and the general public.

Everyone believes that this is a project that will change their lives, whether they are hotel owners in Pokhara, ordinary people living in Parbat district's isolated areas, business owners from the Rupandehi industrial corridor, or investors in Cliff Nepal, an adventure tourism center located in Parbat and Baglung.

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Because of the low voltage, frequent power outages, and inconsistent supply, they must spend a lot of money on fossil fuels to mitigate the risk. Nonetheless, the situation in the neighborhood has changed.

Thanks to the consistent supply of electricity, the Cliff's owner is spending more and adding adventure sports, including a resort for guests.

"Power is the lifeblood of our company," emphasized Cliff owner Raju Karki. "Our ability to operate bungee jumps, sky cycles, and other adventure activities hinges on the availability of quality and continuous electricity," he added. "For the past ninety months, we've enjoyed a consistent and high-quality power supply."

Laxman Subedi, the President of the Hotel Association Nepal Pokhara, shares Karki's perspective. He asserts that the reliable electricity supply has eliminated the need for hotels to use fuel to power air conditioning and lights, resulting in decreased costs. The electricity supply is not only reliable but also clean, green, and of high quality.

Since the completion of the first phase of the Dana-Kushma project nearly two years ago, there has been a significant improvement in Pokhara's overall electricity supply. The installation of transformers and conversion to three-phase power can now be accomplished swiftly, with Rajib Singh, the director of the Pokhara Distribution Center, highlighting the company's commitment to system improvements and technical support for customers. The steady supply of electricity from NEA's Pokhara office ensures minimal wait times. However, challenges exist in advancing the distribution system, as residents are reluctant to have transformers placed in front of their homes despite the shared desire for reliable power.

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Despite economic downturns prompting most industries to reduce capacity, industrialists in the region express satisfaction with the adequate power supply and infrastructure. Thakur Prasad Shrestha, President of the FNCCI Siddharthnagar Branch, noted, "Despite the economic recession impacting our factories' capacity, the consistent electricity supply and regional infrastructure have kept us content." Gratitude was expressed for the funding provided by the Asian Development Bank for significant projects, including the International Airport. With an improved electricity supply, there is optimism for the prosperity of the region “

The completion of the 220 kV Kaligandaki Corridor and the bolstering of distribution networks, funded by the Asian Development Bank (ADB), mark the resolution of the energy crisis in the Rupandehi and Nawalparasi Industrial Corridor, as per Nawa Raj Ojha, head of the Lumbini Province of Nepal Electricity Authority (NEA). Ojha highlights that the project not only alleviates power shortages in the industrial corridor but also promises an improved power supply for Nepal's western and eastern regions, contributing to increased exports to India.

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The Bhairawa substation of NEA now boasts a significantly increased supply capacity due to the South Asia Subregional Economic Cooperation (SASEC) project. Within the Rupandehi industrial corridor, three 33 kV substations, including the Special Economic Zone (SEZ), have been established. Formerly hindered by a lack of electricity, the SEZ is now seamlessly integrated into the national grid.

The power supply landscape in the Bhairawa industrial corridor, including the SEZ, has undergone a transformative change. Sanjaya Kumar Mishra, the director of Bhairawa Distribution Center of NEA, affirms that NEA is well-prepared to provide necessary electrical connections to industrialists. The project has successfully implemented advanced substations featuring 132 kV and 33 kV connections.

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The upgraded power supply has positively impacted the investment climate, creating a conducive environment for investments, according to Vinaya Kumar Goenka, a prominent figure in the food and beverage industry. Jan Hansen, principal economist at ADB Nepal Resident Mission, emphasizes ADB's commitment to promoting clean and green energy for Nepal's economic growth. He adds that the new ADB Country Partnership Strategy for 2025–2029 will prioritize the development of the private sector.

Financial assistance from ADB has played a pivotal role in enhancing the energy sector in Nepal. NEA's Managing Director, Kul Man Ghising, is credited with leading Nepal out of a prolonged period of energy scarcity into a new era of illumination. Ghising notes the significant progress made in the energy industry, including the installation of multiple transmission lines, the development of hydropower projects, and the strengthening of distribution networks and substations.

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Nepal's strides in energy generation, transmission, and distribution, with ADB's support, are underscored by Pushkar Manandhar, Senior Project Officer for Energy at ADB Nepal Resident Mission. He highlights the substantial contribution of the over $900 million SASEC project to upgrading and fortifying Nepal's electrical system.

Manandhar claims that Nepal's power supply system will become more dependable after the Power Transmission and Distribution Efficiency Enhancement Project's distribution and control center construction is completed.

Kaligandaki Corridor

As the first leg of the project Dana-Kusma 220 kV Transmission line completed three years ago, the second leg of the project was completed on Monday, December 12, with the inauguration of the second part (Kusmma-New Butwal) by Minister of Energy, Water Resources, and Irrigation Shakti Bahadur Basnet.

This will contribute to a major decrease in the region's consumption of coal and fossil fuels by improving the western part of Nepal's overall electricity supply and making it more dependable and high-quality.

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The ADB's Country Director for Nepal, Arnaud Cauchois, underlined the importance of the transmission line in delivering dependable and eco-friendly electricity. In the upcoming days, he also promised Nepal further investments in the clean energy industry.

Nepal's 'Green, Resilient, and Inclusive Development' (GRID) plan has the full backing of ADB, according to Country Director Arnaud Cauchois. The plan emphasizes long-term green and sustainable growth, climate action, and resilience in the face of many dangers. It also adopts a proactive approach to tackling structural concerns.

“We acknowledge Nepal's progress in cross-border power trade. With the completion of this transmission line, which is connected to the New Butwal substation, one of the proposed points for cross-border power trade with India, Nepal will be able to utilize its resources for development and contribute to increasing the share of clean energy in the South-Asia region. Furthermore, it is expected that the Butwal-Bhairawa area, which is rapidly industrializing, will benefit from the power supply originating from the Himalaya and the hills.”

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He also commended NEA's outstanding efforts, particularly in the construction of the Kushma-New Butwal transmission line. NEA's commitment to ensuring vigilant procurement practices, robust supervision and monitoring, and the allocation of adequate resources during the implementation of this transmission line is commendable. It is hoped that these best practices will continue in future projects, including the proposed 635 MW Dudh Koshi Storage Hydropower Project.

SACEC Project

The ADB assisted NEA in expanding the capacity of the country's power system and promoting the growth of renewable energy sources through the SACEC Power System Expansion Project. In addition to finishing the Kaligandaki corridor transmission line, the project has completed more than 200 kilometers of power transmission lines and substations, including those in the 220 kV Marsyangdi-Kathmandu Transmission line.

More than 1,000 kilometers of power distribution lines in the eastern, central, and western areas of Nepal have been completed under the project. Building mini-grid based solar and solar/wind hybrid energy systems is the project's way of bringing affordable renewable energy to remote locations.

With power connected through the 90-kilometer transmission line that runs from Kushma Municipality-2 Khurkot in Pavart to the New Butwal substation in Sunwal Municipality-13 Suryabasti in Nawalparasi (Bardghat Susta West), the industrial sectors in Butwal, Nawalparasi, and Rupandehi districts have experienced much-needed relief.

"This transmission line has provided us with uninterrupted, high-quality electricity, even though the economic recession has forced our industries to operate at just over 60% capacity," said Keshab Bhandari, a member of the Federation of Nepalese Chamber of Commerce and Industry (FNCCI).

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“Voltage swings, frequent blackouts, and technical malfunctions were once commonplace problems. The situation has improved as a result of ADB's transmission and distribution investments. Nepal currently provides a safe, dependable, and superior power source to our area. For this accomplishment, we are grateful to the government of Nepal, the ADB, and the NEA,” said Bhandari.

In August, the transmission line was put into service once the section's construction was finished. As part of the Kaligandaki Corridor 220 kV double-circuit transmission line project, a 130-kilometer double-circuit transmission line has been built in this section.

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Project manager Chandan Ghosh said that the transmission line project under the SASEC Power System Expansion Project, funded by the ADB, originates at the Annapurna Rural Municipality-3 Dana substation in Myagdi, travels through Parbat, Baglung, Syangja, Palpa, and Rupandehi, and ends at the new Butwal substation in Nawalparasi (Bardghat Susta West).

The transmission line can carry about 1,200 MW of power. Minister of Energy, Water Resources and Irrigation Shakti Bahadur Basnet stressed the importance of the Kaligandaki corridor transmission line during the opening ceremony, emphasizing how it connects Nepal's east-west power grid and facilitates international trade in electricity.

Within eighteen months, the Minister said, there will be no need to import electricity during dry seasons. “By 2035, the government wants to generate 28,000 MW of electricity. Federal, state, and municipal governments must work together to find a solution to the electrification of irrigation problem.”

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In order to provide a high-quality power supply, Kul Man Ghising took office as Nepal Electricity Authority's managing director for a second term, promising to improve the distribution system and grow the transmission network. In his first four years in office, Ghising brought an end to Nepal's decade’s old power outages. He underlined how important it is to finish building the extra transmission lines.

MD Ghising said that the newly built New Butwal substation serves as an important center for the distribution of electricity east-west, for local use, and for export to India.

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He noted that work is still being done to build transmission lines throughout the nation and that, over the next five to six years, this development is expected to cost an estimated 6-7 trillion rupees.

The project's completion is a notable accomplishment, despite the intricate legal restrictions for tree removal during the Covid-19 outbreak. MD Ghising claims that the transmission line will promote Terai's industrialization, help Nepal increase its output of ecologically benign energy, and allow it to export excess electricity to India.

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The completed project include two sections of the transmission line along the Kaligand Corridor. In the first part, a 40-kilometer transmission line was constructed in Kushma Municipality-2, Parbat, from Dana to Khurkot. After completion and going into service, two substations, one in Khurkot with a capacity of 220 ÷ 132 KV and the other in Dana with a capacity of 220 ÷ 132 ÷ 33 KV, were built. In both substations, 100–100 MVA power transformers were also erected. 236 towers have to be built for the second phase, Kushma-New Butwal. A 220 KV multi-circuit line from Sunwal Municipality-13 Badera to the New Butwal Substation has towers built for it.

To promote bilateral and regional power trade as well as local electricity consumption, a new 220 kV substation has been constructed in New Butwal.

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“ New Butwal substation will facilitate distribution and transmission within the country as well as support the development and bolstering of Nepal-India cross border transmission networks,” said MD Ghising/

MPs Khadg Basnet and Vaijnath Jaiswal, representing Lumbini Province, have urged for the provision of reliable and high-quality electricity to support potential industrial growth in districts such as Nawalparasi and Rupandehi. They also emphasized the importance of fulfilling agreements made with locals during the construction of the transmission line project.

The construction of the Kaligand corridor transmission line has faced obstacles due to delays in obtaining the tree felling permit, local obstructions, and the Covid-19 pandemic. According to project head Chandan Ghosh, these issues have caused delays.

In 2074 BS, a contract was signed with the Indian company L&T for the construction of the Kushma-New Butwal section.

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“The Kaligandaki Corridor Transmission Line Project was funded by the Nepal Government and Authority, as well as concessional loans received from the Power System Expansion Project under the South Asia Sub-Regional Economic Cooperation (SASEC) of the Asian Development Bank. The revision process maintained objectivity, conventional structure, clear and objective language, and grammatical correctness. The estimated cost of the project is approximately 11 billion rupees,” said Ghosh.

Upon completion of the New Butwal-Bardghat 21 km transmission line, infrastructure for the 220 kV transmission line will be established from Hetaunda to New Butwal. The construction of the 220 kV transmission line from Hetaunda to Bardghat via Bharatpur has also been completed and is now operational. The Millennium Challenge Corporation (MCC) will construct the New Butwal-Gorakhpur 400 KV international transmission line for electricity trading with India. The transmission line will also be used to export excess electricity from the country to India.

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According to manager Ghosh, the project has generated over Rs. 4 billion in revenue by evacuating electricity from the region and has a high rate of return.

As Nepal's installed power generation capacity has steadily grown from 706 MW in 2011 to over 2300 MW in 2023, requiring an average annual investment of 5 percent, Nepal needs significant investment in its transmission and distribution systems.

In his statement, MD Ghising emphasized the need for additional transmission lines, such as the 220 kV Kaligandaki corridor and the 400 kV Hetauda-Inaeruwa transmission line, to meet internal consumption and export demands. Investment from Nepal's major development partner, ADB, is crucial.

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ADB has been one of Nepal's most important development partners since 1969, offering financial support for reforms as well as technical help and policy recommendations. ADB began with a US$6 million concessional loan and a grant for technical assistance. As MD Ghising correctly noted, Nepal's energy sector depends on ADB's assistance, and the country cannot meet its goal of exporting electricity without ADB's help. Completion of this project is a game changer in the energy sector.

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